13-58 (CPA adapted) 13-58. Comprehensive Budget Plan Panther Corporation appeare
ID: 2508495 • Letter: 1
Question
13-58 (CPA adapted) 13-58. Comprehensive Budget Plan Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various (LExplanation / Answer
PANTHER CORPORATION Budgeted Income statement for the year ended December 31, Year 2 Revenues: Sales Revenue 2400000 Other Income 36000 2436000 Expenses: Cost of goods sold: Direct material 852000 Direct Labor 872000 Variable Overhead 520000 Fixed Overhead 51000 2295000 Beginning Inventory 192000 2487000 Ending Inventory 255000 2232000 Selling: Salaries 80000 Commisions 64000 Promotion and advertising 180000 324000 General and administrative: Salaries 64000 Travel 10000 Office Costs 36000 110000 Income Taxes 0 2666000 Net Income -230000 working: Total Revenue 2436000 Cost of goods sold 2232000 Selling Expenses 324000 General Administration 110000 2666000 Net Income before taxes -230000 There seems to be disproportionate increase in direct labor cost which is resulting in net loss. PANTHER CORPORATION Budgeted Balance Sheet as at December 31, Year 2 Assets Cash 4800 Accounts Receivable 320000 Inventory 255000 Current Assets 579800 Plant and Equipment 520000 Accumulated Depreciation 164000 356000 Total Assets 935800 Liabilities and Stockholders' Equity Accounts Payable 180000 Notea Liabilities 200000 Accrued Payables 93000 Total Liabilities 473000 Common Stock 280000 Retained Earnings: Balance as at Jan.1, Year 2 432800 Net income for the year 2 -230000 Dividends paid 20000 Balance as at Dec.31, Year 2 182800 Total Stockholders' Equity 462800 Total Liabilities and Stockholders' Equity 935800 Cost of manufacture Direct Material 852000 Direct Labor 872000 Variable Manufacturing Overheads 520000 Fixed Manufacturing Overheads 51000 Total cost of manufacture 2295000 Production units 450000 Cost per unit 5.1 Sales units 400000 Ending Inventory - units 50000 Ending Inventory - Value 255000
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